Builders seek waivers for healthcare law

Association Health Insurance Plans

Previously: A 2007 law required associations to keep 95 percent of participants in their health insurance plans year to year.

What’s new: Associations are pushing for a bill that would allow waivers from the 95-percent requirement under certain circumstances.

What’s next: Senate Bill 1003 is before the state Senate. Democrats and Republicans alike say it stands a good chance of being passed by the Legislature.

A law written to keep business associations from dropping health coverage for sick people overreached, association leaders say, and threatens the associations’ ability to offer attractive health plans to their members. The groups are backing a bill now before the Oregon Legislature that would allow waivers to a provision they consider unreasonable.

House Bill 3321, passed in 2007, required associations to keep 95 percent of their members in health plans year to year. The idea was to prevent cherry-picking – that is, keeping only the healthiest members so insurance rates stay low.

But members voluntarily drop insurance plans all the time, said John Killin, president of the Associated Builders and Contractors Pacific Northwest Chapter. They may be cutting costs or even shopping around for a better plan elsewhere.

That makes the 95-percent retention rate too hard to attain. “Turns out, the way the (state) Insurance Division interpreted it, it was impossible to meet,” Killin said. “Long term, nobody could meet this rule.”

In its 2009 report to the Legislature, the Department of Consumer and Business Services found that nine of 22 associations failed to keep 95 percent of members in their health plans. They ranged from 50 percent to 94 percent retained.

“If they don’t meet the 95-percent retention rate in the statute within their first year, they have a year to correct it,” said Teresa Miller, administrator of the Insurance Division.

If associations fail to reach 95 percent by their second year, then the more-restrictive laws governing all small businesses apply.

Senate Bill 1003, currently before the state Senate, would give associations a way to seek a waiver from the retention requirements. The Department of Consumer and Business Services would set standards to review waiver requests, making sure the associations aren’t excluding their sickest members. Department officials would then decide whether to grant a waiver.

The process allows upstanding associations to keep offering health plans, Miller said, without opening the door to abuse from rogue associations. “We feel comfortable with this compromise,” she said.

“We feel like this will allow us some flexibility.”

A coalition of business groups formed before the Legislature’s short session to lobby for the bill. They testified before the Senate Health Care Committee on Tuesday.

The Republican leadership hasn’t taken an official position on the bill, but caucus spokesman Michael Gay said he doesn’t expect much opposition. In fact, Sen. Jeff Kruse, R-Roseburg, is listed as a cosponsor.

“I imagine it will have fairly broad support within the caucus,” Gay said.

That’s good news for contractor groups, Killin said, especially during a recession. As contractor members try to cut costs to stay in business, some drop health coverage. Participation in ABC health plans can fluctuate from around 75 percent of members down to around 30 percent.

“Not to say that (passing) a bill is ever easy,” he said, “but this one is going well.”